Big Outsourcing Shift Predicted for IT Jobs

Computerworld - A new report on the IT labor market predicts that 35% to 45% of full-time IT jobs in the U.S. and Canada will be shifted to contractors, consultants, offshore technicians or part-time workers by 2005. And some analysts and IT labor experts said those figures, although eye-popping, may not be far-fetched.
However, four high-level IT managers said the predictions made in the report issued last week by New Canaan, Conn.-based Foote Partners LLC probably won't apply to their companies. For them, outsourcing hasn't proved to be a lower-cost alternative to keeping IT inside corporate walls.
"While there are times where I'd love to throw something to the outsourced den, so far we've found that it wouldn't be cost-effective for us," said Amy Courter, vice president of IT at Valassis Communications Inc., a Livonia, Mich.-based marketing services firm.
"We do everything in-house," noted John Studdard, senior vice president and chief technology officer at Lydian Trust Co., a financial services firm in Palm Beach Gardens, Fla. "The reason we've been successful in light of 9/11 and the economy and the bursting of the dot-com bubble is that we're in control of our own destiny and not locked into long-term contracts that may or may not be relevant to our business anymore."
Nevertheless, David Foote, president and chief research officer at Foote Partners and a Computerworld columnist, said American companies "can't afford to do application development in the U.S. anymore. The nature of the business has changed."
IT job sharing will also play a role in reducing full-time positions, Foote said. He based his estimates on surveys his company conducted last year with 1,880 private-sector and government employers, which were asked what percentage of their future IT workforces will be in-house vs. external.
Foote's timeline for such a massive workforce shift "is a little aggressive," said Maria Schafer, an analyst at Meta Group Inc. in Stamford, Conn. "It will be after 2006 before we get to that point." Schafer added that she still thinks application development and Web design are growth areas for IT workers in the U.S.
Cheaper Labor Overseas
But the shift of technical work to offshore operations by many companies "doesn't bode well" for American IT workers, Schafer said. The cost of some types of IT work is 20% to 50% less in places such as India, Eastern Europe and parts of South America, she said.
Although Foote's prediction "sounds radical now, it's not too far off the mark," said Jeremy Grigg, a New York-based analyst at Gartner Inc. "You've